Question 1

When the Fed increases the discount rate,banks:

Accepted Answer

A)  must purchase more government securities.
B)  must pay a higher rate when they borrow from the Fed.
C)  will lower the rate they charge to borrowers.
D)  must hold a greater amount of funds in reserve against deposits.E) C) and D)
F) None of the above

Question 2

The Federal Reserve assists in the processing of checks between banks.

Accepted Answer

A) True 
 B)False

Question 3

The Federal Reserve consists of seven Federal Reserve districts.

Accepted Answer

A) True 
 B)False

Question 4

As a response to the bank failures of the ________,a system of federal deposit insurance was established to strengthen the banking system.

Accepted Answer

A)  Civil War
B)  wildcat banking crisis of the 1880s
C)  Great Depression
D)  banking crisis of the early 1980sE) C) and D)
F) B) and C)

Question 5

Under the Federal Reserve Act of 1913:

Accepted Answer

A)  membership in the Federal Reserve System was made voluntary for all banks.
B)  federally chartered banks were required to join the Federal Reserve System.
C)  membership in the Federal Reserve System was required of all banks that had deposits of more than $1 million.
D)  all banks were required to hold reserves equal to at least 50 percent of their deposits.E) None of the above
F) A) and B)

Question 6

The Federal Reserve System enabled the U.S.economy to avoid serious banking problems during the Great Depression.

Accepted Answer

A) True 
 B)False

Question 7

The government is concerned about inflationary pressures that seem to be building within the nation.Restricting the growth of money supply provides an effective strategy to reduce these inflationary pressures.

Accepted Answer

A) True 
 B)False

Question 8

Efficient monetary systems eliminate the use of barter.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is included in the M-2 definition of the money supply but not the M-1 definition?

Accepted Answer

A)  Currency
B)  Checking account deposits
C)  Traveler's checks
D)  Savings account depositsE) A) and C)
F) None of the above

Question 10

Bob read a newspaper story that indicated a dramatic increase in money market accounts and certificates of deposit during the last three months.The story reported that all other major components of the U.S.money supply remained unchanged.Based on this information,Bob can conclude that for the past quarter:

Accepted Answer

A)  both the M-1 and M-2 money supplies were stable.
B)  the M-1 money supply has increased,but the M-2 money supply was stable.
C)  the M-2 money supply has increased,but the M-1 money supply was stable.
D)  both the M-1 and the M-2 money supplies have increased.E) All of the above
F) None of the above

Question 11

Savings and loan company failures soared in the early 1980s because:

Accepted Answer

A)  tax laws changed making real estate investments less attractive.
B)  the federal deposit insurance mismanaged their funds.
C)  legislation passed that favored commercial banks.
D)  investors identified more profitable opportunities.E) All of the above
F) A) and B)

Question 12

As the bank has grown and expanded to other towns in its region,several of its business customers are participating in global trade.Which of the following services provided by the bank would help companies conduct international business?

Accepted Answer

A)  Letters of credit
B)  Banker's transactions
C)  Certificates of deposit
D)  Trade exchange lettersE) None of the above
F) B) and C)

Question 13

Since the Great Depression and still today,the Bank of Bramblewood has the FDIC designation.This means:

Accepted Answer

A)  Bank of Bramblewood is a member of a consortium of banks that can pool funds to make loans too big for any single bank to finance.
B)  bank gives preference to veterans.
C)  the depositors of the bank are also its owners.
D)  individual accounts at Bank of Bramblewood are insured by an independent agency of the federal government.E) B) and C)
F) None of the above

Question 14

The organization responsible for conducting monetary policy in the United States is the:

Accepted Answer

A)  Federal Trade Commission.
B)  Council of Economic Advisors.
C)  Federal Reserve System.
D)  Federal Monetary Control Authority.E) C) and D)
F) B) and D)

Question 15

A demand deposit is the technical name for a checking account.

Accepted Answer

A) True 
 B)False

Question 16

As a relatively poor nation,Liberia wants to obtain funds for a project to improve the availability of water and electricity.Liberia should contact the International Monetary Fund.

Accepted Answer

A) True 
 B)False

Question 17

In an electronic funds transfer EFT)system,the information of a transaction is communicated from one computer to another.

Accepted Answer

A) True 
 B)False

Question 18

The ___________ rate represents the interest rate charged by the Fed when loaning funds to member banks.

Accepted Answer

A)  discount
B)  prime
C)  federal funds
D)  reserveE) A) and B)
F) C) and D)

Question 19

Although there are many new ways to perform electronic funds transfer,legally,the only way that an employer can pay an employee is by writing a check.

Accepted Answer

A) True 
 B)False

Question 20

The interest paid on time deposits,today,represents the main difference between time and demand deposits.

Accepted Answer

A) True 
 B)False

Exam 20: Money,financial Institutions,and the Federal Reserve

The Federal Reserve assists in the processing of checks between banks.

Correct Answer
verified

Efficient monetary systems eliminate the use of barter.

Correct Answer
verified

As the bank has grown and expanded to other towns in its region,several of its business customers are participating in global trade.Which of the following services provided by the bank would help companies conduct international business?

Correct Answer
verified

Although there are many new ways to perform electronic funds transfer,legally,the only way that an employer can pay an employee is by writing a check.

Correct Answer
verified

Savings and loan company failures soared in the early 1980s because:

Correct Answer
verified

In an electronic funds transfer EFT)system,the information of a transaction is communicated from one computer to another.

Correct Answer
verified

As a response to the bank failures of the ________,a system of federal deposit insurance was established to strengthen the banking system.

Correct Answer
verified

The organization responsible for conducting monetary policy in the United States is the:

Correct Answer
verified

A demand deposit is the technical name for a checking account.

Correct Answer
verified

The ___________ rate represents the interest rate charged by the Fed when loaning funds to member banks.

Correct Answer
verified

Since the Great Depression and still today,the Bank of Bramblewood has the FDIC designation.This means:

Correct Answer
verified

When the Fed increases the discount rate,banks:

Correct Answer
verified

The Federal Reserve consists of seven Federal Reserve districts.

Correct Answer
verified

As a relatively poor nation,Liberia wants to obtain funds for a project to improve the availability of water and electricity.Liberia should contact the International Monetary Fund.

Correct Answer
verified

The government is concerned about inflationary pressures that seem to be building within the nation.Restricting the growth of money supply provides an effective strategy to reduce these inflationary pressures.

Correct Answer
verified

Correct Answer
verified

Under the Federal Reserve Act of 1913:

Correct Answer
verified

Which of the following is included in the M-2 definition of the money supply but not the M-1 definition?

Correct Answer
verified

The interest paid on time deposits,today,represents the main difference between time and demand deposits.

Correct Answer
verified

The Federal Reserve System enabled the U.S.economy to avoid serious banking problems during the Great Depression.

Correct Answer
verified

Exam 20: Money,financial Institutions,and the Federal Reserve

The Federal Reserve assists in the processing of checks between banks.

Correct AnswerverifiedShow Answer

Efficient monetary systems eliminate the use of barter.

Correct AnswerverifiedShow Answer

As the bank has grown and expanded to other towns in its region,several of its business customers are participating in global trade.Which of the following services provided by the bank would help companies conduct international business?

Correct AnswerverifiedShow Answer

Although there are many new ways to perform electronic funds transfer,legally,the only way that an employer can pay an employee is by writing a check.

Correct AnswerverifiedShow Answer

Savings and loan company failures soared in the early 1980s because:

Correct AnswerverifiedShow Answer

In an electronic funds transfer EFT)system,the information of a transaction is communicated from one computer to another.

Correct AnswerverifiedShow Answer

As a response to the bank failures of the ________,a system of federal deposit insurance was established to strengthen the banking system.

Correct AnswerverifiedShow Answer

The organization responsible for conducting monetary policy in the United States is the:

Correct AnswerverifiedShow Answer

A demand deposit is the technical name for a checking account.

Correct AnswerverifiedShow Answer

The ___________ rate represents the interest rate charged by the Fed when loaning funds to member banks.

Correct AnswerverifiedShow Answer

Since the Great Depression and still today,the Bank of Bramblewood has the FDIC designation.This means:

Correct AnswerverifiedShow Answer

When the Fed increases the discount rate,banks:

Correct AnswerverifiedShow Answer

The Federal Reserve consists of seven Federal Reserve districts.

Correct AnswerverifiedShow Answer

As a relatively poor nation,Liberia wants to obtain funds for a project to improve the availability of water and electricity.Liberia should contact the International Monetary Fund.

Correct AnswerverifiedShow Answer

The government is concerned about inflationary pressures that seem to be building within the nation.Restricting the growth of money supply provides an effective strategy to reduce these inflationary pressures.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under the Federal Reserve Act of 1913:

Correct AnswerverifiedShow Answer

Which of the following is included in the M-2 definition of the money supply but not the M-1 definition?

Correct AnswerverifiedShow Answer

The interest paid on time deposits,today,represents the main difference between time and demand deposits.

Correct AnswerverifiedShow Answer

The Federal Reserve System enabled the U.S.economy to avoid serious banking problems during the Great Depression.

Correct AnswerverifiedShow Answer

Correct Answer
verified

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